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Tube Investments of India Limited (TIIL) is engaged in manufacturing of bicycles, fitness equipment, electric scooters in the cycle segment; tubes, strips and tubular components in the engineering segment; car doorframes & channels, automotive and industrial gears in the metal formed products segment. TIIL offers two well established brands of bicycles- ‘BSA’ & ‘Hercules’ and indigenously developed Montra. The company has 25 manufacturing plants throughout India.

TIIL being dominant in each of its segments and having long standing relationship with all the major automobile players stand to benefit from the ever increase in demand for its products. Changing concept of bicycles and increasing acceptance of electric scooters augurs well for the company. We have valued the company using SOTP method based on the valuation of its core business at Rs 194 (15x FY18e EPS) and 46.26% stake in Cholamandalam Investment and Finance at Rs. 262, 70.12% of stake in Shanthi gears @ Rs. 25 and 60% stake in Cholamandalam MS General Insurance @ 239 per share and arrived at a target price of Rs 719, implying a potential upside of 24% from current levels over a period of 12 months. We therefore recommend a BUY on Tube Investments of India.

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